As you know, we have continuing discussions with many different agencies and departments in this particular area. We have had our discussions with the ICA, but I wanted to make it clear that there are other procurement agencies involved with which we have not as yet discussed it. I am not in the position this afternoon to recommend an amendment in the Mutual Security Act, but I merely wanted to bring up to date what has actually transpired.

Mr. MULTER. On that subject, Mr. Chairman, I am not at all satisfied with the answer we received from ICA as to what objections they may have to a set-aside program.

I wish we could ask them to refer to the language in existing law that precludes set-aside programs for small business.

I don't believe they can point to any legislative language which precludes it. I think it is more a matter of policy. I don't want to get Mr. Barnes mixed up in changing their policy. I believe they are wrong about saying that it requires legislation.

Mr. Barnes, would it be appropriate for you to tell us who you talked to in ICA about the matter?

Mr. BARNES. May we tell your counsel-I am not myself familiar. Mr. YATES. Mr. Barnes, do you think that the activities or the possibilities of improvement of small business in foreign trade would be helped if SBA acted as a clearinghouse for all small business activities or do you think the Bureau of Foreign Commerce actually performs a worthy function?

Mr. BARNES. I think it actually performs a worthy function. This is an area which requires an immense amount of specialized knowledge. When you begin to deal with the trade and market situations in individual countries around the world, it would require a type of training and knowledge that we do not have in our present personnel.

Mr. YATES. Presently they don't have representatives around the world. They deal with the consular service and they say they have 33 field offices here, in which they perform this function.

Of course, you have field offices throughout the country as well. Do you have any contacts with consular officials at all?

Mr. BARNES. Not in the State Department; no, sir.

Mr. YATES. Why shouldn't you establish contact with them? Mr. BARNES. Well, the information on marketing and trade opportunities is collected as a function of the Department of Commerce; it is available to all business. It is not a matter that involves differences as between small and large business, as I see it.

Mr. YATES. Do you have anybody in your agency who analyzes the information that comes in, in terms of developing opportunities for small business throughout the world?

Mr. BARNES. No; we do not, sir. The way we handle it is by reference. If we get an inquiry from a small business in our regional or field offices, we discuss with them whether it is a financial problem or esssentially a marketing problem, or what the nature of it is.

If it is, as it usually is, a desire for information about marketing opportunities in a foreign country and what the physical problems are there, our field staff will give to the inquirer a copy of this pamphlet, "The Opportunities in Foreign Trade," and will refer them to the nearest Department of Commerce office which is frequently not too far away.

Mr. YATES. The committee has gotten the impression that there is a lot of "pamphleteering" in the field and very little else.

ICA does it, and you do it and to the extent it provides information, of course, it is good, but I think there is another step and a more dynamic step that can be taken here in the way of actually channeling business. The Bureau of Foreign Commerce isn't interested necessarily in small business but is interested in all business. While I recognize the difficulties that you have found present, because you have been organizing an agency and setting it up and have been given more and more duties by the Congress and you have been trying to operate them, but I wonder whether or not in relying upon the Bureau of Foreign Commerce, ICA and the others, if you haven't really overlooked the possibility for a substantial source of business for small business.

Mr. BARNES. Well, as I indicated in my statement, this is possible, but I have found myself-we have a number of inquiries that come into Washington and even some that I have handled myself—that it is possible to get an answer to these technical questions about foreign trade very quickly from the Bureau.

In my own area of the country, there are pipeline contractors, oil drilling companies, many, many small concerns that deal in countries all around the world and the only answer they want is to a technical questtion. If they can get this answer by a letter to the Department of Commerce, or a phone call, then that is the only answer they want.

Mr. YATES. Do you ever receive any complaints from small businessmen in connection with their efforts to engage in international trade?

Mr. BARNES. I have never received any complaints on their lack of ability to obtain information, or that this referral we made did not work, that they didn't get an answer, were not courteously treated or couldn't get all the information they desired. I have seen evidence that the Department of Commerce has gone to a great deal of trouble sometimes to get the answers.

I haven't had any complaints from small businessmen about any inability to engage in foreign trade. I am more concerned about the Webb-Pomerene law, since the activities under this law provide for the very type of pooling arrangement I have discussed in my statement and which seems to me almost an essential for small businesses to trade abroad in any volume.

The individual concerned is immediately at a disadvantage if he has to finance a salesman who covers 4 or 5 countries

Mr. YATES. Would you say the law is inadequate at the present time?

Mr. BARNES. I am saying, from the figures that I have, the number of pools under the Webb-Pomerene law is decreasing and the law itself is enforced by the Federal Trade Commission, which is a regulatory agency. It does a good job. I don't mean this critically in any sense at all, but their job is not to promote the use of this law or extend its benefits to larger number of firms or anything of this nature.

Mr. YATES. Is it difficult to qualify under the law for a prospective pool?

Mr. BARNES. I don't think that it is. I haven't had any personal experience. I have got a list of some of the companies that have formed pools and, of course, it isn't limited to small business alone. In many cases it is more likely to be a trade association, or concerns in a particular industry that form a pool under that law.

When we prepared this pamphlet, "Pointers in Foreign Trade,” there were at that time 41 pools under the Webb-Pomerene law that had some 470-odd companies, I think, involved in them. We took a reading before this hearing to see what the situation was now, There are now, I think, 35 or 37.

In any event, there are four or five fewer now than there were in 1946 and a corresponding lesser number of companies involved.

I have hesitated to recommend-to make any recommendation myself in this particular field. I could leave with you a list of the associations that have filed, which is dated September 30, 1955, if it would interest you.

Mr. YATES. It would be of interest to us and it may be received for the committee files.

(The document referred to will be found in the files of the committee.)

Mr. MULTER. So far as I know there is no Government agency charged with the duty of encouraging the establishment of associations or corporations under the Webb-Pomerene Act. FTC performs a policing function under the act to make sure there is no violation of that act or, more important, of the Antitrust Act.

Do you believe your agency should encourage more activity in that line?

Mr. BARNES. I am reluctant to make that a recommendation. I merely suggest this is an area in which your subcommittee might take a look to see what is needed. I don't know that that would do it. We have formed the other type pools and attempt to do so and even promote them.

Mr. YATES. That is domestically.

Mr. BARNES. Yes, and yet there are not very many that are formed. It seems to me there is a much better, more realistic reason to form a pool perhaps under this law than there is even for these domestic purposes. At least as good a reason.

Mr. MULTER. My own observation is that the reason there is not more activity in that field is the same reason that there is less activity abroad.

I think if we get something like H.R. 5 enacted, which is the Boggs bill, there may be more activity.

But when the tax range is as high as it is, there is nothing to encourage foreign investments. If anything it discourages any further investments abroad.

Plus the fact that if there are any tax gimmicks available, the individual company or the small businessman will probably follow the big business company if it can do it.

The tendency is to up a company abroad and ship from here, or even manufacture abroad, so that the Webb-Pomerene Act corporations are continuing to lose their usefulness rather than gain any usefulness. Mr. BARNES. That is why I was reluctant to make any particular recommendations in the field. It is a study in itself.

Mr. MULTER. I think it is deserving of more attention.
Mr. YATES. Our counsel is going to look into it.

Are there any further questions?

Mr. MULTER. Along that same line the Western Hemisphere Corp. is something, too, that many of our small businessmen might be able to avail themselves of but no one has ever called it to their attention, they do not know how it operates and they just do not get into that operation. Of course, it has very severe restrictions. The Western Hemisphere Corp. must be almost solely in the business of operating outside the United States but within the Western Hemisphere.

Mr. BARNES. At the time of the preparation of the pamphlet referred to, the Office of the Economic Adviser of the Small Business Administration obtained from the Internal Revenue Service the latest information that was then available on the corporate income tax returns for 1957 with credit claimed for Western Hemisphere Trade Corp., and classified them by total assets and by net income and income classes.

This information has not, as far as I know, been made available before and it seems pertinent to your inquiry.

Mr. YATES. We would like to get a copy of that information for the files.

Mr. BARNES. I will introduce it into the record. You realize, of course, that it is not on current years but it does give you a typical year. (The document referred to will be found in the files of the committee.)

Mr. YATES. If there are no further questions, Mr. Barnes, we are very grateful for your help on this matter.

The subcommittee stands adjourned.

(Whereupon, at 4:30 p.m., the subcommittee adjourned to reconvene at the call of the chairman.)

APPENDIX

APPENDIX A

Selected press releases announcing bids published by Department of Commerce

A review has been made of all BFC press releases on foreign government tenders, covering the period January 1 through July 17, 1959. This study covers a total of 112 press releases. Two separate tabulations have been made, one for NATO bids and the other for the balance of tenders.

In the case of NATO announcements, all that is required is that interested firms express by cable, or otherwise, any interest in participating in the particular project, and the bid may be submitted at a later date. The bid deadline, therefore, allows much more time than the date for filing an interest or intention to bid. The details respecting each project-how to bid, specifications, etc.—are sent by mail directly from NATO's contracting office to each interested firm having established, as a result of the earlier announcement, its competence to participate in the bidding. The study covered 26 releases, and the date of the BFC press release to the closing date for filing with the NATO office averaged 132 days. Exhibit A contains the tabulation.

In the case of non-NATO tenders, the bid must be reasonably complete at the time of filing, unless the announcement specifies other conditions. The tabulation for the period January 1 to July 17, 1959, showed a total of 86 releases. 139